Should I refinance? Please see details?

I have a $100,000 first mortgage at 4.75%, a $60,000 second mortgage at 8.5% and $23,000 credit card debt($10,000 at 24.99%, $13,000 at 4.99%). Should I refi at 5.5% fixed FHA for $183,000($1686 P/I, taxes %26amp; ins. per mo.) with $5000 closing costs, $5000 escrow acct. and $13,000 cash out, or refi at 5.383% fixed conventional for $168,000($1361 P/I per mo.) with $2000 closing costs and $8,000 cash out. I will use the cash out to pay down my credit card debt. Both quotes are for 15 year fixed mortgages, no points, no prepayment penalty.

Should I refinance? Please see details?

you need to call your CC card and reduce the ($10,000 at 24.99%) they will take it down to less than 5% for 6 months

then as the same question

Should I refinance? Please see details?

If you are 100% certain that you will never miss or be late on a CC payment, then go with the smaller loan at the better interest rate. Take the cash out and pay down the higher interest rate card. Did that one paid off as soon as possible. The other (assuming it is fixed rate) is fine to keep at 4.99%.

The safe method is to go with the first option. You won%26#039;t have to worry about the CC defaulting you (which they can do even if you are late to a different company!) and your rate going from 4.99% to 24.99%. The interest rate isn%26#039;t that much higher so that isn%26#039;t a big deal. The additional $3k in closing costs seems a bit high.

If it wasn%26#039;t for your CC debt (mainly the 24.99% card), then I would say to not refinance at all. You have a great first mortgage (again assuming it is fixed), and your second mortgage is in line for second mortgages. It might be better if you could secure a personal loan to cover your CC debt or at least the $10k. Do you have enough equity in your home to take another $10k out to pay the mortgage? Generally, it is a bad idea to roll unsecured (CC) debt into a secure (home) debt, but it looks like that is your plan, so if you reall like you must do it, then I would try to leave the primary mortgage alone and see what you can do to just add $10k to the second.

Should I refinance? Please see details?

What is your current total monthly expense of the items you are looking to payoff with the refinance? When I work with my clients I use the rule of thumb of a $100/mo. of savings. FHA is great financing and I would recommend that direction because you would be able to payoff the high interest credit card.

Should I refinance? Please see details?

Less closing costs and better rate.......Conventional. I am employed by one of the largest mortgage brokers in the country. We work with over 350 lenders to bring you the best rates and programs. I welcome the opportunity to help. Please feel free to contact me via email anytime with any questions you may have.

Should I refinance? Please see details?

Hello Amos

There is alot of missing information here to give you the most accurate advice, but ill do my best with what i have.

First of all, the #1 thing you have to understand here is the difference in interest you are paying on your various debts.

Threre are only 3 types of debt any person can carry:

Real Estate: mortgage

Installement: car loans, student loans

Revolving debt: credit cards, store accounts, Home equity lines of credit

Real estate and installment debt are the best types of debt to carry. I you make payments on time, these debts are actually good for your credit. (Because they are secured debts, and you cannot charge them higher)

Revolving debt is the worse type of debt that anyone of us can carry. There are many reasons for this. First, revolving debts have no end period etched in stone. You can continue to charge more money sinking you further into debt. A mortgage or car not on the other hand you start at year 1, and end at year 5, 10, 30, etc.

More importantly, revolving debts carry a COMPLETELY different type of interest then real estate and installments do.

Most people do not realize this difference either. On real estate and installment debt you pay whats called %26quot;SIMPLE INTEREST%26quot; meaning you pay interest only on the PRINCIPAL balance you owe.

On a revolving credit card debt, you pay what is called %26quot;COMPOUNDED INTEREST%26quot; If you havnt heard of compounded interest, it means you are paying interest on top of interest that you have accrued since opening the account.

Example: You opened a credit card 2 years ago, and you owe them $20k. Lets say in the 2 years, you have paid a total of $4-5000 in interest. Next month when you go to make your next payment, you are not only paying interest on the $20k balance, but you are paying interest on the $4-5000 of accrued interest as well. THen the next month, you will pay interest on top of that interest!!!! Hence the term compunded interst.

Needless to say, you will end up paying triple the amount of interest then you would on a mortgage debt.

So, to get to your question, you are going to want to take the option that will pay off the MOST amount of credit cards! Not only does this eliminate compounded interest, and save you thousands of dollars in unecessary interest, but you will see your credit scores skyrocket immediately. Carrying large balances on credit cards is the NUMBER 1 reason for declining credit scores across america. (More so then missed payments, collections, judgements, etc.). This is because SO MANY peopel have credit card debt, so dont feel alone..

One answerer said dont pay off the 4.99% credit cards. I mean absolutely no offense to him, but He must not understand the difference between compound interest and simple interest either.

Even though it says 4.99%, if that same debt were mortgage debt, (even at 5-6%) you would be paying MUCH LESS interest on it.. Because remember, that 4.99% compunds, so you end up paying somewhere near triple, or in other words roughly 14-15%. (ouch) (Now jsut imagine the compund interest ont he 24%!!!!)

Now, to the even more important section, i have bene doing FHA loans for quite some time, and i HAVE NEVER seen closing costs as high as what you have listed here!!

Whoever you are talking to to get this quote is OVERCHARGING you!!!! I can get you lower rates then what you have listed at much less cost to do so.

Just know banks and most brokers are paid by charging you extra fees and giving you a higher interest rate then you qualify for. THis is the ONLY way they make profit from originating a loan for you.

I work with a wholesale lender, and we operate MUCH differently. We are directly partnered with the investors that fund our loans. Because we are partnered, we are simply paid a flat fee BY THEM for putting another loan in their portfolio. Think about it, they get another loan to make interest off of, so they pay our company for doing so.

Again brokers and banks are different. They have to charge additional fees just to make the proift because they investors arent paying them flat fees. The only way they receive money from the investor is by giving you a higer rate then you qualify for.

With that said, my company is a nationwide lender based in Chicago IL. You didnt mention what state you reside in, but i welcome you to visit my profile. I have sucessfully helped numerous people from Yahoo Answers both refinance and purchase new homes, and i would be happy to answer any questions you may have. Feel free to call or email me, my contact information is listed on my profile.

If nothings else, at least compare what i can offer to what you currently are being presented and make a decision from there.

Either route, i wish you the best of luck, and i hope this was helpful!

Jason Fry

Licensed Mortgage Consultant

Should I refinance? Please see details?

Right now you are paying interest on 2 separate mortgages and compound interest on the credit cards. It is a great idea to roll them all onto one loan and lower your overall monthly outgo. That way you could use the extra savings to either pay the house down, or put the money into some type of savings/money market fund and let your money work for you. I would get a couple other quotes to make sure you are getting the best deal out there. I know a friend of mine told me they are doing 15 year fix FHA loans a low as 5%.

You should really shoot him an email. Mike@afbankloans.com

Good Luck!!